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EM central banks maintain course as BRL remains undervalued

Weekly investor research

25 January 2021

All EM central banks left policy rates unchanged last week. However, communications from the central banks in Brazil and Turkey signalled a more hawkish stance, while the South African and Malaysian central banks tilted in a more dovish direction. The Brazilian real (BRL) remains undervalued versus its long term fundamentals. South African inflation declined further. The Chinese government introduced requirements for Covid-19 testing for people wishing to travel during the Chinese New Year. Thailand’s exports rose faster than expected. The unemployment rate declined in Mexico. The International Monetary Fund (IMF) released the fourth review of Angola programme, which highlights strong willingness to service debt. Zambia purchased 90% of the Mopani Mine from Glencore. 

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